W.W. Grainger, Inc.
) reported a 4% year-over-year increase in sales in Aug 2013,
close to the year's slowest growth rate of 3% reported in March.
The increase was flat compared with the prior-month's growth rate
and is well below the 10% rise in Aug 2012.
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Aug 2013 had 22 selling days, compared with 23 in last year. The
gain in Aug sales stemmed from higher volumes (5%), and
acquisitions (1%), partly offset by a 1% decline from foreign
exchange and lower sales of seasonal products (1%).
Geographically, daily sales in the U.S. rose 5%, helped by higher
volume (5%), and acquisitions (1%), partly offset by decline from
lower sales of seasonal products (1%) due to cooler weather than
the previous year.
Both light and heavy manufacturing sales as well as natural
resources rose in the mid- single-digits. It was followed by low
single-digit gains in Commercial, Government, Retail, Contractors
Sales to the Government sector increased overall as daily sales
to state and local governments, which account for more than 70%
of government sales, grew in the mid-single digit. On the
contrary, daily sales for the federal government business
declined in low-double digits compared with the prioryear, but
Daily sales in Canada declined 1% in the U.S. currency, but it
increased 4% in local currency due to rise in volume. Growth was
driven by strength in oil & gas, utilities and forestry end
Daily sales at Grainger's other businesses, which include
operations in Asia, Europe and Latin America, increased 5% as
higher volume and favorable pricing (13%) was offset by
unfavorable foreign currency translation (8%).
According to Grainger, daily sales growth in the U.S in September
is trending above August level. However, sales is reportedly
lower than August outside U.S. due to slowing sales in local
currency and unfavorable foreign exchange. Thus, overall
September sales growth so far is in line with August. Third
quarter 2013 will have 64 selling days, one more than third
Grainger reported second-quarter 2013 earnings of $3.03 per
share, up 15% from $2.63 a year ago and ahead of the Zacks
Consensus Estimate of $2.96. Revenues in the quarter were $2,381
million, up 6% from $2,249 million in the year-ago period, but
below the Zacks Consensus Estimate of $2,392 million. Grainger
expects earnings per share in the range of $11.40-$12.00 for
fiscal 2013. Sales growth is expected in the range of 5% to 8%.
Grainger expects foreign exchange to negatively impact the
full-year sales by 1%. The company expects 4% to 10% daily sales
growth for the remainder of the year. The company is not planning
any interim price increase for the remainder of the year owing to
the low-inflation environment for commodities.
Grainger will continue to benefit from its focus on expanding its
sales force, product offerings and strengthening its businesses
across all operating regions, mainly in Asia and Latin America,
as well as continued investment in e-commerce - its most
However, throughout 2013, Grainger's daily sale growth rate has
ranged from a low of 3% (March) to 8% (Jan, April). Furthermore,
Grainger's incremental growth will weigh on margins in the short
term. Sequestration remains a headwind for the federal government
business, particularly within the Military.
Lake Forest, Ill.-based Grainger is a leading North American
distributor of material handling equipment, safety and security
supplies, lighting and electrical products, power and hand tools,
pumps and plumbing supplies, cleaning and maintenance supplies,
forestry and agriculture equipment, building and home inspection
supplies, vehicle and fleet components, and various aftermarket
Grainger currently retains a short-term Zacks Rank #3 (Hold).
), both with a Zacks Rank #1 (Strong Buy), and
), with a Zacks Rank #2 (Buy), are favorable options for